Indonesia’s Energy and Mineral Resources (ESDM) Ministry is hoping the country will produce up to 11.8 million tonnes of domestically processed nickel ore in 2015.
The ministry is optimistic to achieve the amount, with some smelters starting operations in 2015.
The announcement dims hopes that the country would resume exports of raw nickel ore. Such exports were ground to a halt in 2014 as Indonesia implemented domestic refining, causing a big blow to the Supramax freight market in Southeast Asia.
According to ESDM data, around 12 companies have committed to operate nickel smelters as of April. The smelters produce three products, namely nickel pig iron (NPI), ferronickel, and refined nickel metal with the total production capacity of around 708,640 tonnes, 175,000 tonnes, and 6,000 tonnes a year respectively.
Ferronickel is a ferroalloy-containing nickel content of up to 45%.
ESDM Ministry’s mineral and coal director-general R Sukhyar said around 6.47 million tonnes of nickel ore per year would need to be processed. Processed nickel can be sold at a much higher price than that of raw nickel ore. Raw nickel ore used to be sold at about USD500 per tonne while processed nickel prices could reach USD15,000 a tonne.
“The metal’s export value is projected to reach USD700 million,” Sukhyar said.
So far, only nickel smelters owned by PT Vale Indonesia and PT Aneka Tambang Tbk are operated in Indonesia have substantial production capacity. A factory owned by PT Vale Indonesia can produce 80,000 tonnes of nickel matte a year while PT Aneka Tambang Tbk can produce 20,000 tonnes of ferronickel a year.
Currently, companies such as PT PAM Metalindo, PT Bima Cakra Perkasa, and PT Ang & Fang Brother are ready to operate their smelters in 2016. In 2014, domestic refined nickel ore production was only 5.3 million tonnes.